U.S. crude oil bottomed out and continued to rise after rebounding, and Biden’s verbal intervention achieved certain results

On Friday (November 19), oil prices continued their good uptrend from bottoming out the previous day, which was mainly supported by low-level buying. Although Biden's verbal intervention policy is working, the market is still hopeful that oil prices will rise.

Biden verbally intervenes in oil prices

Since the end of October, Biden has called on the Organization of Petroleum Exporting Countries and its allies (OPEC+) to increase production. In addition, he is considering the release of strategic oil storage (SPR) and even considering export controls. He has also asked officials to investigate whether the oil and gas industry is driving up prices. Other energy-consuming countries such as China have released crude oil reserves together.

Although Biden's various efforts to fight high oil prices have so far only been oral statements and no actual actions have been taken, oil prices seem to have begun to cool down.

Robert Johnston, a senior research scholar at the Columbia Center for Global Energy Policy, said: If the United States and China really coordinate to release SPR together, OPEC will face a new reality. Will they change their supply strategy as a result? If the United States and China cooperate more than once, it will be an eye-opener.

Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said that three-quarters of the recent drop in oil prices comes from the possible release of SPR by the Biden government. In addition, the rebound in US crude oil inventories and the renewed increase in the number of confirmed cases also put oil prices under certain pressure.

For Biden, verbal intervention has reached a level that requires practical actions to strengthen, otherwise traders will no longer pay. So Biden may need to really release SPR, but he can't let SPR drain quickly.

Asia considers releasing strategic oil reserves

Some of the world's largest crude oil buyers said on Thursday that they are considering the use of strategic oil reserves, after a number of sources said that the United States requires coordinated action to cool global energy prices.

Recently, oil prices have quickly recovered from high levels, and this shock therapy seems to have worked.

According to several people familiar with the matter, the Biden administration of the United States has asked the world's largest oil buyers, including China, India and Japan, to consider releasing crude oil reserves.

The United States made this unusual request at a time when economic activities rebounded from the trough at the beginning of the epidemic, pushing gasoline prices and other consumption costs up, and President Biden was busy coping with the political pressure that this brought.

"Brent crude oil has now fallen below $80," said John Driscoll, the general manager of consulting firm JTD Energy in Singapore. "This has a short-term impact on the oil market and may bring at least a 5% correction."

The move by the United States also reflects the disappointment of the United States with the Organization of Petroleum Exporting Countries (OPEC) and its oil-producing allies. They rejected Washington’s repeated calls for accelerating the increase in supply.